- Pound Euro Exchange Rate Reaches towards 1.20 – Fresh confidence in the UK economy unleashed by Philip Hammond.
- Theresa May Continues to Put Together the Post–Brexit Government – Critics highlight Boris Johnson as choice for Foreign Secretary as a bit of a head scratcher.
- Euro Struggles under Reduced Growth Outlook – Warnings of waning growth from finance minister and ongoing Italian bank problems keep Euro demand muted.
- GBP/EUR Expected to Plummet on Bank of England Rate Cut.
The Pound Euro exchange rate has rallied over 0.75% during this morning’s session on the news that new Chancellor of the Exchequer Philip Hammond will not be enacting an emergency budget.
Previous Chancellor George Osborne before stated that further austerity measures and increased taxes would have to be implemented in the event of the UK voting to leave the European Union. However, George Osborne’s legacy of austerity seems to have come to an end as his successor Hammond is less keen on the policy of extensive public sector cuts.
This rally is likely to be short-lived, however, with the Bank of England expected to cut rates, the Pound is more than likely to plummet on midday’s announcement.
Currently, the Pound Euro exchange rate trades at 1.1912 and so far has been holding half of the gains made during its political relief rally.
Sterling (GBP) Restarts Uptrend As Theresa May Carefully Constructs her Cabinet
Political uncertainty abated at the start of this week as Tory leadership contender Andrea Leadsom conceded the race to the generally preferred Theresa May.
On the news of Leadsom dropping out of the contest, the Pound instantly started a rally that only came to a halt halfway through yesterday’s session. Theresa May’s extensive cabinet experience and pro-‘Remain’ ties put her as the favourite for the top spot after the likes of Boris Johnson and Michael Gove idly stepped back from the race previously.
Even in the face of today’s upcoming Bank of England announcement, the Pound has seen significant appreciation as Philip Hammond made it clear that an autumn budget would go ahead as planned without the need to enact an emergency spending plan.
Previously, George Osbourne had espoused on the need for an emergency budget if the country did decide to vote to the leave the European Union. Substantial tax increases and further public spending cuts were floated by the ex-Chancellor but thankfully it appears those policy ideas are off the table.
Euro (EUR) Struggles to Attract Investors in Uncertain Conditions, Weak Growth Outlook
The Euro has lost the momentum gained over yesterday when Pound demand relented after the fresh bout of political stability wore off.
Previously the Euro gained over the course of yesterday’s session, however the new UK Chancellor of the Exchequer’s comments regarding the fact that no emergency budget would be enacted gave Sterling a notable boost that it is still experiencing as of right now. However, demand for the Pound is likely to subside on the Bank of England’s rate announcement.
Weak ecostats have worked in conjunction with the looming Italian loan crisis and post-Brexit EU instability to keep Euro demand fairly low. Eurozone finance ministers have come together to warn of subdued growth in the bloc as trade and market movements have stifled prospects as a result of the Brexit.
Further instability for the region came as the Economic and Financial Affairs Council geared up to reprimand Spain and Portugal on their inability to close their budgetary deficits. Guidelines call for fines but the ECOFIN may elect not to implement them as it remains to be seen how fining the Mediterranean economies would help either of their circumstances.
Pound Euro Exchange Rate Forecast to fall on BoE Rate Slash at Midday
Immediate movement for the Pound Euro exchange rate is just around the corner as the Bank of England gets ready to announce its interest rate decision at midday.
Any cut to the benchmark rate will see the Pound drop and if the central bank elects to slash to 0%, the Pound will see significant declines.
Also set to inspire movement is the BoE’s announcement of its quantitative easing targets. While increased asset purchasing would see the Pound fall in the near-term, the influx of cash to UK businesses will help to offset the ‘Brexit’-battering in the long-term.
Tomorrow’s European Central Bank survey of professional broadcasters provides a particularly useful insight into analysts’ expectations of the future economy. If the survey appears overly bullish then the Euro could experience an increase in support, conversely, if the overall tone is bearish then the common currency may dip.
Ultimately it will be the BoE’s rate decision that will have a lasting impact on the Pound Euro exchange rate in the immediate near-term and ecostats for the rest of the week are bound to be muted by its fallout.
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